11th Annual Bootstrapped Survey
For the 11th year running, Mainsail Partners has conducted its Annual Bootstrapped Sentiment Survey, which interviews hundreds of SaaS founders on their industries, the economy and their predictions for growth. Because bootstrapped companies operate without outside capital, these founders’ insights tend to be indicative of greater business and economic trends for the year ahead.
In this survey, which was conducted in December 2021, we saw how several macro factors are impacting the sentiment of business owners, including the lasting effects of COVID-19 and supply chain challenges.
Despite these influences, the number one challenge confronting bootstrapped founders is a local one that has topped the list consistently: finding good people to hire. “The Great Resignation” and record unemployment are putting unprecedented pressure on companies to hire and retain employees. With that in mind, this year’s survey delves into those challenges and the strategies founders and CEOs are deploying to address them.Here are some of the key insights and major takeaways from the 11th Annual Bootstrapped Sentiment Survey.
Hiring is a priority, and a challenge
Every year since 2011, the majority of survey respondents (64% average) have reported that they will hire “more” people in the next year—not a surprising sentiment, given the expansive mindset of a bootstrapped entrepreneur. In the last five years, this upward trend has continued, culminating with 68% of respondents expecting to hire more people in 2022 and a record-breaking 58% saying that hiring is an important area of investment.
Will you hire more or fewer people next year?
At the same time, bootstrapped companies reported that hiring good talent is going to be a challenge. Of ten possible answers that included “lack of capital,” “increased competition” and “sales and marketing execution”, 63% said that “finding good people to hire” was going to be a challenge. This was an all-time high for this answer. It also outpaced all other answers; the next-highest ranked challenge was “sales and marketing execution” with only 48% selecting it.
“Finding Good People to Hire” will be a challenge
For companies planning to hire more employees in 2022 than in 2021, recruitment seems to be a bigger perceived challenge than retention. Of this cohort, 67% reported that hiring great talent is a concern, while only 36% are concerned about retaining talent. In comparison, companies that are planning to maintain or reduce their number of new hires in 2022 reported that recruitment and retention were equally-ranked challenges.
Recruitment vs. Retention: Top strategies differ
As we embark on the third year of a global pandemic, culture and remote-work flexibility matter more than ever as tactics for both recruitment and retention.
WHEN IT COMES TO RECRUITING, CULTURE IS KING. In 2022, the top two strategies for hiring talent are expected to be “building a great culture” (71%) and “providing flexibility with remote work” (62%).
What strategies are you using to recruit?
To source new hires, companies are relying on LinkedIn, Indeed and similar services, with 66% identifying those as a “top source for new hires”. The next leading source was “employee referrals” (46%).
What are your top sources for new hires?
CULTURE RANKS AS THE #1 STRATEGY FOR RETENTION, WITH 67% REPORTING IT AS A TOP TACTIC. Not surprisingly, compensation also plays a major factor in retention with 59% of respondents saying “raising salaries” will be one of their top strategies. Not far behind is “providing flexibility with remote work” (43%).
What strategies are you using to retain employees?
Within recruitment efforts, the highest priority functions for hiring are Sales (70%), followed by Engineering (49%) and Marketing (41%). While Sales was cited as the higher priority, hiring engineers was expected to be more challenging, with 54% reporting that engineering hires would be a challenge and only 47% claiming the same for sales hires.
What functional areas are your highest priorities for hiring in 2022? Which will be your most challenging?
As pressure on the labor market builds, more companies are looking to outsourcing as a solution for increasing capacity, offering flexibility and managing costs. Fourteen percent (14%) of respondents said they will start using outsourced resources in 2022, while 51% report they have already been utilizing outsourcing. Technology and the increase in established service providers are making outsourcing a more viable option for companies of almost any stage and size. Notably, 27% of companies say they will never outsource.
Are you outsourcing?
Engineering is the most common function to outsource (75%), followed by Marketing (39%) and back-office functions (A/R, A/P, finance, legal) (36%). Very few companies would outsource Product Management (5%) or Customer Service (12%)
Which functions have you, or would you, outsource?
Remote work is here to stay
A full 88% of respondents indicated that their workplace setups would be fully remote, hybrid, or up to the discretion of their employees with only 12% reporting a fully in-person work setup. This is further accentuated by the result mentioned above, that 62% of respondents named location flexibility as a top recruiting strategy.
What will be your workplace setup in 2022?
How many days will employees be in person?
Of companies planning to offer a “hybrid” work setup, 92% expect employees to be in the office for between 2-3 days per week. Only 3% foresee employees working in-office 4 days a week.
Expect to see executive compensation increase
In 2021, executive-level compensation reached new heights. To remain competitive, business leaders will be working to stay in-step with these trends. According to survey respondents, 94% plan to increase salaries again in 2022 with 43% indicating that raises will be “slightly higher” than in previous years and 11% saying they will be “significantly higher”.
How will you increase compensation in 2022?
Further emphasizing this trend is the fact that “raising salaries” was the second-highest strategy reported as a retention tactic (59%).
11 Years and Counting
The economic landscape is different from when Mainsail Partners launched the inaugural Bootstrapped Survey in 2011. By asking the same core questions each year, we have gleaned interesting insights into a decade’s worth of trends.
The economy will do better in 2022, but optimism is waning
Bootstrapped entrepreneurs are an optimistic group, with an 11-year average of 46% saying the economy will do better “next year” as
compared to the previous year. In 2020, this answer hit its peak, with 63% believing 2021 would be better than 2020. Going into 2022, we see a dip in that optimism, with only 43% of respondents believing the economy will be better in 2022.
Do you expect the U.S. economy to be better or worse next year?
Optimism about company growth remains strong
Bootstrapped entrepreneurs, by their nature, tend to be optimistic about their own company’s potential for growth. When asked, “What best describes your expectations for your business in the coming year?” an average of 74% have reported that their company will “grow faster”
than in the previous year. Going into 2022, 76% believe they will grow faster and only 3% said “slower”, an indication of optimism when
compared to the sentiment on the overall economy
How do you expect your business to grow next year?
Bootstrapped companies are hiring
Every year since 2018, more companies have answered that they will hire more people in the coming year as compared to the previous year. This answer increased from 61% in 2018 to 68% in 2021.
Companies are investing more in people and products
Every year, we ask what respondents’ most important areas of investment will be in the coming year. In 2021, “hiring people” jumped to 58% from 44% in 2020 and “product development” hit a new all-time high of 61%.
What are your important areas of investment next year?
ABOUT THE SURVEY
The survey was conducted in December 2021 and resulted in a total of 224 responses. This is the 11th annual Mainsail survey and is intended to help us continue to understand the needs and perspectives of companies that Mainsail invests in and helps to grow. The survey was
conducted via an online survey sent to software entrepreneurs and senior executives at U.S.-based companies.
For the purposes of this survey, “bootstrapped companies” are defined as businesses which have taken no previous capital from venture capital firms, or other institutional investors. Qualification as a bootstrapped company was verified through a qualifying question.
Totals may not sum due to rounding.
This content piece has been prepared solely for informational purposes. The content piece does not constitute an offer to sell or the solicitation of an offer to purchase any security. The information in this content piece is not presented with a view to providing investment advice with respect to any security, or making any claim as to the past, current or future performance thereof, and Mainsail Management Company, LLC (“Mainsail” or “Mainsail Partners”) expressly disclaims the use of this content piece for such purposes.
The information herein is based surveyed founders’ opinions and beliefs as well as Mainsail’s analysis of survey results. There can be no assurance other third-party analyses would reach the same conclusions as those provided herein. The information herein is not and may not be relied on in any manner as, legal, tax, business or investment advice.
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